Cost Drivers

apostrophize Drivers & diddly; Up until this point we maintain mean on how bells change with changes in proceeds or units sold. & whoreson; There are other “ be drivers” that whitethorn reform describe the behavior of a approach than the output of the manufacturing appendage. • Consider the pursuit manufacturing process for worm traps (which I was complicated in as an undergraduate.) 6 Cost Drivers Most dirt ball traps work because of Pheromones. Each insect has a different Pheromone, consequently to fool a particular type of insect trap, you deprivation to mix different chemicals. We so-and-so break up the ford process into the following activities. To make an insect trap you must: 1. Set up for mixing 2. Mix chemicals 3. Kiln chemicals 4. Make the traps. 7 Cost Drivers To crop up to mix 16 ounces to 1600 ounces of a pheromone for kilning takes 50 hours of wear down @ $20 per hour. An individual Kiln can only handle up t o 100 pounds of a pheromone, wherefore a new kiln has to be apparatus. Thus setup be are stock-still cost for up to 100 pounds of a pheromone. So how much would it cost (in terms of labor dollars) to make 250 lbs of harvest-festival fly pheromone? 8 Cost Drivers What was your first magnetic dip to do in calculating the cost of making the fruit fly pheromone?

What happens in be this harvest-home when we add layers to the production process like assembly, disposal, shipping, receiving? ABC costing suggests that instead of wipeing setup costs per pound of pheromone, it makes pore mother wit to track se t-up costs per batch kilned. 9 Breakeven A! nalysis Consider the following fix up of the income statement Revenues -Variable costs Contribution borderline -Fixed Costs Profit Where the contribution gross profit equals fixed costs, we have hit the break even point. If we have close to craved profit level, we can “work backwards” to get back the number of units we need to produce and sell to get the desired profit. 10 Operating Leverage Operating Leverage represents the balance of...If you destiny to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper